THE pound to euro exchange rate is sitting at its highest levels in around a month, amid the latest employment and inflation data, ahead of the Bank of England's crucial Monetary Policy Committee (MPC) interest rate setting meeting.

The pound could jump if the Bank of England looks closer to raising interest rates

Sterling hovered around 1.11 against the euro on Wenesday, amid the latest employment data ahead of the September interest rate decision from the Bank of England on Thursday.

Britain's currency rise further on Thursday if more than two members of the Bank's Monetary Policy Committee (MPC) vote for the base rate to rise from its current level of 0.25 per cent.

It comes after weekly earnings for employees grew by 2.1 per cent in the three months to July compared to the same period last year- but amid inflation- fell by 0.4 per cent in real terms, according to the Office for National Statistics (ONS).

The unemployment rate is at just 4.3 per cent, its lowest level since 1975, as the number of people in work in the period increased by around 181,000.

And Inflation jumped to 2.9 per cent in August - up from 2.6 per cent in the previous month and higher than forecast - as measured by the Consumer Prices Index (CPI).

Under CPI including housing costs (CPIH), the cost of living reached 2.7 per cent - level not seen since 2012, according to the ONS.

The Bank of England has previously signalled limited tolerance for high inflation and the latest figures could raise the chance of more members voting for an interest rate rise.

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Michael Hewson from CMC Market said said: "A solid wages number could shift the calculus on the MPC further towards a rate rise with chief economist Andrew Haldane likely to join the other two hawks Michael Saunders and Ian McCafferty in pushing for a rate rise, given recent comments he made during the summer, when inflation ticked up to the same level it is now.

"He suggested that 'beginning the process of withdrawing some of the incremental stimulus provided last August would be prudent moving into the second part of the year', though the caveat was that the data supported such a move."